Kauffman Fellows Take On VC Sexual Harassment, Bench Mentor McClure

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If you’re looking for a counterpoint to the recent flurry of news stories about sexual harassment and gender bias in the tech sector, the Kauffman Fellows program isn’t a bad place to start.

The Palo Alto, CA-based program, a spinoff of the Ewing Marion Kauffman Foundation, has been a gateway into the venture capital industry for women and other under-represented groups for nearly two decades. It provides a two-year mentoring and education program, and then lifelong membership in a global network where members have been screened for integrity and other character traits. (A group of Kauffman Fellows is pictured above.)

The network aims to provide a safe place for members to talk about thorny problems in their business lives, including sexual harassment. Program alums are working on initiatives to reduce harassment and other barriers to diversity in the venture industry. And Class 22, the new group of fellows admitted in June, is 35 percent women.

“It’s still not good enough, but it’s well beyond the industry norm,” CEO and president of Kauffman Fellows Jeff Harbach (Class 16) says of the gender breakdown.

That doesn’t mean, however, that the program has been left untouched by the sexual harassment issue, and by recent revelations about accused VCs in The Informationand the New York Times. One of Kauffman Fellows’ prominent mentors from an outside VC firm, Dave McClure, was accused of harassment in the Times story. Harbach and other leaders of the program were faced with a difficult question that’s arising more often for organizations: Should the wider business community keep up ties with someone who has been accused of sexual misconduct, and has admitted wrongdoing?

Their dilemma was perhaps more pointed than for other business organizations confronted with the same issue, because one of Kauffman Fellows’ core missions is to open opportunities for women, unshadowed by bias or exploitation.

“Inappropriate advances”

Back on June 14, when the Kauffman Fellows program announced the 51 applicants chosen for Class 22, it also named some of its outside mentors. The first listed was McClure, the co-founder of seed-stage funding firm 500 Startups. McClure had been a mentor for participants in two previous Kauffman classes.

Two weeks later, on June 30, McClure was one of five VCs accused as harassers in a lengthy story in the New York Times, based on interviews with 10 women in tech. In an apologetic blogpost on July 1, McClure admitted making “inappropriate advances” to multiple women he knew through his work, including a candidate for a job at his firm. (The story reported no accusations by participants in Kauffman Fellows.) By July 3, McClure had resigned from 500 Startups at the request of his co-founder, as TechCrunch reported.

McClure’s apology didn’t mention an alleged incident involving entrepreneur Cheryl Sew Hoy, who leveled the most serious charges made publicly against McClure. McClure didn’t respond to Xconomy’s e-mail requests for comment about the following account from Hoy.

In a blogpost published July 3, Hoy wrote that in 2014, McClure was part of a group that gathered at her apartment for a brainstorming session about a project of hers that 500 Startups might fund. After the other guests left, according to Hoy, McClure declined to go, propositioned her for sex, and pressed her into a corner in spite of her protests. In the blogpost, Hoy says she pushed McClure away and got him out the door.

Hoy wrote: “The fact that I had to say no multiple times, and that he had push[ed] himself onto me and kissed me without my consent was way more than crossing the line of inappropriateness. It’s legally considered a sexual assault.”

Leaders at Kauffman Fellows had to decide whether McClure, having lost his job, should also be sidelined as a mentor in a program where, Harbach says, “David has done a lot of good work.”

The decision wasn’t made lightly, but the answer was yes. “He is not a mentor,” Harbach says. The program holds all teachers and mentors to a certain standard, he says. “It was determined, based on issues we’re aware of, that now is not a good time for David to be a mentor for the Kauffman Fellows.” McClure didn’t respond to Xconomy’s e-mail query about the program’s decision, and about how other business associates are now treating him.

McClure and other accused tech principals may face the consequences of a sea change in public attitudes toward sexual harassment and gender bias. A shift seemed to occur early this year after former Uber engineer Susan Fowler accused an Uber manager of propositioning her. Her blogpost triggered an investigation of Uber’s workplace culture, and contributed to the departure of Uber founder Travis Kalanick as CEO, a wave of media attention, and new charges by other women against VCs.

The resulting scrutiny extended not only to the employer of one of the VCs who resigned in the wake of recent sexual harassment reports, Justin Caldbeck of Binary Capital, but also to some of his former business associates. Caldbeck’s past employer, Lightspeed Venture Partners, and Legacy Venture, an investor in Binary, apologized for failing to take action, or further action, after having received reports about Caldbeck’s behavior, according to the New York Times.

For business organizations that want to avoid being tainted by sexual harassment—or by their associations with a harasser—there’s little in the way of a roadmap. While U.S. employers may have clear legal obligations to protect their own staffers, venture investors don’t have an employer-employee relationship with startup founders.

Reid Hoffman, a partner at Greylock Partners and co-founder of LinkedIn, has proposed that investors at venture capital firms hold themselves to a voluntary code of conduct.

“VCs should understand that they have the same moral position to the entrepreneurs they interact with that a manager has to an employee, or a college professor to a student,“ Hoffman wrote in a Medium post after reading The Information’s story about Caldbeck. “That is to say, as soon as you start discussing potential business deals of any kind with an entrepreneur, there is no such thing as an innocent or appropriate sexual proposition or remark.”

Hoffman went further, writing that venture investors, limited partners, and entrepreneurs should stop doing business with VCs who pursue sexual or romantic relationships with entrepreneurs who have current or possible business deals with them.

Aside from VC firms, other non-employers can face similar decisions about discontinuing professional ties when they have introduced into their business circles someone later accused of harassment—including an organization with the longstanding diversity mission of Kauffman Fellows. The same concerns might arise for accelerators, conference organizers, and other businesses. (Among those organizations is Xconomy, which, before the sexual harassment allegations came out, invited McClure to speak at some of its industry conferences.)

This could mean that moving forward in their careers could be complicated for McClure and others in the same situation, given the heightened visibility of the sexual harassment issue. Bloomberg reported last month that some investors hesitated to back a new fund being raised by Fred Destin, formerly with Atlas Venture in Boston and Accel in London, due to a female startup founder’s account of his behavior at a technology conference party in 2013.